The following information applies to Questions 34 – 37: McKinney Company McKinne
ID: 2524082 • Letter: T
Question
The following information applies to Questions 34 – 37:
McKinney Company
McKinney Company has the following information available for October when 3,500 units were produced (round answers to the nearest dollar).
Standards:
Material
3.5 pounds per unit @ $4.50 per pound
Labor
5.0 hours per unit @ $10.25 per hour
Actual:
Material purchased
12,300 pounds @ $4.25
Material used
11,750 pounds
17,300 direct labor hours @ $10.20 per hour
34. Refer to McKinney Company. What is the labor rate variance?
a.
$875 F
b.
$865 F
c.
$865 U
d.
$875 U
35. Refer to McKinney Company. What is the labor efficiency variance?
a.
$2,050 F
b.
$2,050 U
c.
$2,040 U
d.
$2,040 F
36. Refer to McKinney Company. What is the material price variance (based on quantity purchased)?
a.
$3,075 U
b.
$2,938 U
c.
$2,938 F
d.
$3,075 F
37. Refer to McKinney Company. What is the material quantity variance?
a.
$2,250 F
b.
$2,250 U
c.
$225 F
d.
$2,475 U
Standards:
Material
3.5 pounds per unit @ $4.50 per pound
Labor
5.0 hours per unit @ $10.25 per hour
Actual:
Material purchased
12,300 pounds @ $4.25
Material used
11,750 pounds
17,300 direct labor hours @ $10.20 per hour
Explanation / Answer
34 Labor rate variance = 17300*(10.2-10.25)= $865 F 35 Labor efficiency variance=10.25*(17300-3500*5)= $2050F 36 Material price variance=12300*(4.25-4.5)= $3075 F 37 Material quantity variance=4.5*(11750-3500*3.5)= $2250 F
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